Liquor sales a taxing issue for St. Charles

Patrons make their way toward Alibi Bar & Grill in downtown St. Charles on Friday night. While St. Charles' liquor tax has brought in much-needed revenue for the city, the later hours of operation that came with it are now threatened by a proposal to return to 1 a.m. closing times to curb issues with drunken patrons.

ST. CHARLES – City finance director Chris Minick doesn’t discount the contribution liquor sales have made to the city’s budget.

Since its implementation in June 2010, the city’s 2 percent liquor tax has generated $2,167,996 for St. Charles, according to data through September. Per fiscal year, Minick said, revenues have annually amounted to about $1 million, or 2 to 2.5 percent of the general fund budget, which pays for public safety, public works and general administration.

“It does represent some real dollars and helps us provide programs, definitely,” Minick said. “It’s probably close to the cost of providing roughly 10 police officers.”

The city implemented the tax at the height of the economic downturn as part of a comprehensive strategy to address budget deficits, Minick said. He noted it played a large role in helping St. Charles balance the budget and that revenues from the tax have increased each year.

“It has been a very reliable and good revenue source for us,” Minick said.

Business owners opposed the tax, saying they worried it would hurt their profits and would make them less competitive with cities without such a tax.

As a compromise, the City Council voted to let establishments serving alcohol close at 2 a.m. every night instead of just on Fridays and Saturdays.

Now, however, bars and restaurants are operating under the threat of daily 1 a.m. closings. Mayor Don DeWitte proposed the reduced hours in an effort to curb overserving. The City Council tabled its decision when license holders protested.

Steve Baginski, spokesman for the recently formed tavern association, said an earlier closing time goes against that previous compromise.

“What is disturbing to the bar/restaurant owners is that not only are we losing the extra hours Sunday through Thursday, but also the extra hours on Friday and Saturday,” he said. “There is no reduction in the tax to the establishments, but a significant reduction to our sales.”

Baginski, owner of The Beehive Tavern and Grille, noted that reduced operating hours also would affect the amount of liquor taxes generated.

In addition to having less time to sell drinks, he said, the 1 a.m. closing could prompt customers to leave St. Charles establishments significantly earlier to socialize elsewhere or avoid downtown St. Charles altogether.

“As a resident of St. Charles, my question then becomes, ‘Where will that tax money be made up?’ ” he said.

According to the city, liquor taxes are generated by about 100 businesses. In addition to bars and restaurants, the list includes grocery stores, liquor stores, drug stores, big-box stores and hotels.

City data show liquor taxes generated by bars and restaurants accounted for about one-third of all liquor taxes collected from June 2010 to September 2012.

This year, contributions from bars and restaurants accounted for 35.8 percent of the $638,259 in taxes collected through September.

“Unlike some people would suggest, the bars are not the highest contributing component of that tax structure,” DeWitte said. “The downtown establishments are actually in the minority with regards to the revenues that are generated.”

He and Minick noted the liquor tax helps offset the cost of policing and maintaining a safe downtown. But, DeWitte stressed, the two are separate issues.

“We would be just as concerned about the activities going on if there weren’t a liquor tax that had been implemented,” he said.

In his 48 years in St. Charles, Baginski said, he doesn’t recall bars being such a hot topic.

He wants residents to know that many liquor license holders are charitable, he said, noting they have food drives and toy drives, host pub crawls for worthy causes and sponsor local teams.